[Satellite News 01-20-11] Microsat Systems Canada (MSCI) hopes its plans to build and launch CommStellation, a constellation of 78 low-Earth orbit microsatellites, will propel the company to the forefront of international backhaul and capacity markets
    MSCI President and CEO David Cooper told Satellite News that he will secure nearly $1 billion in funding ahead of the launch of the satellites, which he claims will barely scratch the service of this enormous market.

Satellite News: What kind of impact do you think CommStellation can make on the market?

Cooper: I have never seen a program or an opportunity that has more market pull than this one. The backhaul needs are enormous. When I bought the company, microsatellites were traditionally being used for scientific and special military purposes. My vision was that they could also be used for commercial applications. CommStellation is the first implementation of my vision.
    From the market perspective, we believe this will be a very significant offering. We are the first constellation to address the portion of the market north of 45 degrees and outside of well-served urban areas with limited or no access to high-speed Internet. I think every government worldwide has recognized that access to high-speed backhaul infrastructure is key to the growth of Internet business models as well as wealth generation for people. If they don’t have it, companies in those countries are going to fall behind, so from this perspective, this is very significant.

Satellite News: Who are your main targets in terms of potential customers?

Cooper: We see the traditional mobile service providers as key customers for this service. They have the most obvious need for the constellation. ISPs who are currently serving communities with limited access to high-speed Internet backhaul will also be interested in this. Additionally, there will be private entities from the military, government and organizations who will want secure access, on a global basis, to various parts of their organization. Lastly, there will be governments who want to provide this access to their citizens.

Satellite News: What will be the total capacity of the system?

Cooper: Each of the 78 satellites will be capable of 12 gigabits per second. However, in the north, where the satellite signals converge, the available bandwidth actually increases. We will have 10 times the capacity of O3b, and even that is only 5 percent of the addressable market, so we won’t have any difficulty in pre-selling it.

Satellite News: What frequency band are you likely to use?

Cooper: It hasn’t been approved yet but most likely Ka or Ku.

Satellite News: What are the costs involved in building the system?

Cooper: CommStellation will cost less than $1 billion. We have looked at some of the market drivers for that. As you can imagine, there will people interested in this from a government perspective, from services providers and from pure financial investors. We have had conversations with all three of these groups. Eventually, there will be end-users who have an interest in this too.
    MSCI will build the microsatellites and integrate all components in-house, as this is our business. We have been talking to providers of the payload and will be making the announcement regarding the contract in approximately six months.

Satellite News: How will it be funded?

Cooper: Like most major initiatives, it will be funded in tranches. Our first initiative will be to build satellite prototypes, followed quickly by flight models. There have been a number of initiatives proposed to us in terms of funding from government sources that could use export credit agency funding, but I don’t view the provision of financing to be the major challenge here. This is such a strong market pull, strong application and need, that when we need to get the financing in place, the money will be available. If you look at a company like O3b, they have moved from high-risk money to much more institutionalized funding now that they are further into the program. We would anticipate a similar approach as we develop our program.

Satellite News: How long will it take for CommStellation to see a return on investment?

Cooper: On an operating basis, the system will be profitable immediately. From an investor perspective, we are looking at an ROI in the two-to-four year timeframe. You can imagine that many people that are looking to invest in CommStellation have more than just a financial ROI in mind. If you are a government that is looking to provide access for rural communities, the value of this service doesn’t just come in the direct form of dollars and cents.
    In the United Kingdom, they just announced a program for a geo satellite to address most of the country by providing backhaul. This geo satellite has limited capabilities both in capacity and ability to reach northern parts of the globe. Nonetheless, the British government, from my understanding, was very involved in that, as they saw the value in providing at least some service. Every country around the world will have that same interest in securing access to our constellation.

Satellite News: When will the first satellites be launched and when do you expect to announce the first customers?

Cooper: We expect the first satellites to be launched during the fourth quarter of 2014. We are scheduled to have the complete constellation up by the end of 2015. As far as end users and mobile service providers, we would expect to start announcing those in 2013.
   We need to select a launcher and the ground segment to help us define and identify the satellite interfaces. We will do that, but we have some time to establish both of those, so I would think we will make that announcement within the next 12 to 18 months. We want to make the microsatellites as launcher independent as possible. We have six orbital plains and we are looking for one launcher per orbital plain, so that will limit us to some of the larger launchers. At this stage, there are five to six launch companies that could meet this requirement.